| Offshore outsourcing is no longer a novel idea. It is an | | | | Distance to vendors |
| accepted business practice and for many the offshore | | | | India, the most popular destination being 10000 miles |
| operation has become a significant part of their overall | | | | away means it takes an entire day to reach your |
| operations. So it is essential they succeed in this | | | | vendor. Travel to the vendor at regular intervals will be |
| endeavor. However the reality is that better than 50% | | | | part of managing offshoring. |
| of offshoring initiatives fail to meet original expectations. | | | | Internal Challenges |
| Successfully managing offshore projects requires that | | | | Unrealistic expectations |
| you understand the major challenges. I have broken | | | | Often companies overestimate savings and |
| them down into two categories – External and | | | | underestimate the effort and cost of establishing and |
| Internal. | | | | managing the relationship. You need to invest the time |
| External Challenges | | | | up front to gain a realistic understanding of both; once |
| Staffing and retention | | | | done, it is important to communicate to all stake |
| Competition for the right skills in countries like India is | | | | holders. |
| very high; you need to determine whether the vendor | | | | Improper project selection |
| has and can offer you the staff with right level of | | | | You need to clearly define project selection criteria; in |
| experience. Once you establish a team, you need to | | | | particular whether you plan to offshore projects that |
| proactively manage staff retention. | | | | require direct customer interaction by the offshore |
| Time Zone Differences | | | | team. |
| Your staff in the US will need to get used to staying | | | | Governance |
| up late and/or coming in early for telecons with the | | | | How do you plan to organize the offshoring function? |
| offshore team. | | | | In addition to the technical part of the management, |
| Country and vendor infrastructure | | | | how do you manage the business and relationship |
| Both can be issues; you need to determine if your | | | | issues? How do you plan to measure if the effort is |
| project needs special tools and/or other infrastructure. | | | | successful? |
| Security | | | | Processes |
| Major offshore vendors have established good | | | | Recognize that vendor processes for development |
| business practices; but if you are dealing with a small | | | | and integration may be different than yours; reconcile |
| vendor you need to make sure that you are not taking | | | | differences and establish a mechanism that is |
| risking with your IP. | | | | acceptable to both parties. The other major element is |
| Vendor stability | | | | establishing processes for visibility and control. |
| Thorough due diligence of vendor should be part of | | | | What does this mean and what can you do? |
| the vendor selection process. | | | | For competitive reasons, every company must |
| Cultural differences | | | | determine if offshore outsourcing makes sense. If the |
| This is a significant issue; training programs that help | | | | decision is to go forward, you need to recognize that it |
| you understand how culture affects communications | | | | takes a lot of work. Management is key to offshoring |
| and your projects are available to help you. | | | | success. Understanding challenges is the first step. |
| Geo-political concerns | | | | Next, you should get a deeper understanding of best |
| This should be taken into account during vendor | | | | practices that make offshore outsourcing successful in |
| selection. Once a relationship with a vendor is | | | | your particular environment. |
| established, it is hard to change. | | | | |